The Week Ahead: Homebuyers still knocking on the door at Persimmon

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The Independent Online

The revival in the housing market could come to a juddering halt if, as feared, there is a further rise in interest rates. So observers will be keen to judge the mood of the country's largest housebuilder this week.

Persimmon, widely regarded as the sector's bellwether, is expected to deliver a strong set of interim results but attention will be firmly focused on the current strength of demand from buyers.

The housebuilder recently released a trading update saying it had sold more units than expected: 8,000 at an average price of £188,000 against predictions of 7,700. This triggered a round of upgrades among brokers. UBS lifted its first-half profits estimate from £250m to £262m, while Mike Hake, an analyst at Merrill Lynch, is retaining a "buy" recommendation and looking for profits of around £254m.

However, the Bank of England surprised the market by raising rates one quarter per cent to 4.75 per cent earlier this month, and its Governor, Mervyn King, has warned they might have to go up again to curb inflation. Martin Ellis, chief economist at the Halifax, thinks rates could rise to 5 per cent either later this year or by early next year.

The latest terrorist scare is bad news for the travel industry, not just for the airlines but for hoteliers, as guests were left stranded in terminals. So there will be a lot of interest in how InterContinental Hotels views the crisis when it reports results.

The group's shares have drifted in the past few months, from a high of 1,005p to 835p, on worries over how its US business is doing. US consumers have been going through a belt-tightening exercise in response to rising oil prices and fears of higher interest rates.

Analysts, however, think the fall has been overdone, pointing out that only 15 per cent of InterContinental's revenue is derived from the US. Morgan Stanley is expecting solid interim results, with profits up 24 per cent to around £100m. As well as being expected to give a view on the security clampdown, management will be quizzed over a number of issues, including its policy on further cash returns to investors and whether it might expand through acquisition. Some believe consolidation in the industry is likely and InterContinental could be a key player.

Stagecoach, meanwhile, holds its annual general meeting on Friday. It is a crucial time for the transport group, as it waits to hear whether its major rail franchise, South West Trains, will be renewed; it could find out as early as next month. Investors will want to know what's next now that Stagecoach has agreed to sell its London bus business. Analysts are particularly keen to find out if it intends to fill the hole with either bolt-on acquisitions or an all-out merger.

Elsewhere, and the gaming industry has been under intense scrutiny following the arrest by US authorities of the chief executive of BetonSports. So the world's biggest bookmaker, Ladbrokes, can expect a grilling over its overseas expansion when it reports interim figures.

Recently spun out of Hilton, Ladbrokes has been expanding. Brokers believe it is endeavouring to offer a fully integrated gaming service - online, offline, casinos and bingo - and HSBC thinks it "could make substantial acquisitions to achieve this", with names such as Rank and Stanley Leisure in the frame. First-half profits should come in at around £139m.

Pest control group Rentokil Initial saw its shares slide on concerns that this week's first-half figures could disappoint. Its boss, Brian McGowan, has already admitted this year's profits will be down on last year but has made optimistic noises about an improvement in its markets' underlying trend in the second half.

The other big name updating is BHP Billiton. The Anglo-Australian giant has benefited from the boom in commodity prices, and this week's full-year numbers are set to show this continuing. But investors are likely to be more concerned about Escondida. The Chilean copper mine, the world's biggest and majority owned by BHP, has been hit by strike action, which is reportedly costing Escondida $16m (£8.4m) a day in net profit. BHP said last Friday that it had called off talks and shut down the mine after workers blocked all roads to the site. Copper prices then jumped.

Away from results, and investors are hoping that MFI will finally secure the sale of its struggling retail arm. The private equity firm Merchant Equity Partners is in talks to take on the 200 stores for a nominal sum of £1.

CALENDAR

Tomorrow 21

UK RESULTS: (interim) Keller, Raymarine; (first quarter) Workspace

Tuesday 22

UK RESULTS: (final) Brambles Industries; (I) Bodycote International, InterContinental Hotels Group, Michelmersh Brick, Office2Office, Panmure Gordon & Co, Persimmon

Wednesday 23

UK RESULTS: (F) BHP Billiton; (I) Eurocastle Investment, Gibbs & Dandy, Immedia Broadcasting, Robinson, Slough Estates

Thursday 24

UK RESULTS: (I) Anglo Asian Mining, Fayrewood, John Laing, Ladbrokes, Playtech, Rentokil Initial, Rexam

Friday 25

UK RESULTS: (I) Advent Capital, Henderson

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